Elon Musk’s xAI Seeks To Raise $1 Billion In Equity

Elon Musk’s AI startup, xAI, has filed with the US securities regulator to raise up to $1 billion in an equity offering.

The filing with the US Securities and Exchange Commission (SEC) showed the firm has so far raised $134.7 million in equity financing from a total offering amount of $1 billion.

The startup was revealed by Elon Musk in July 2023 to challenge OpenAI’s ChatGPT with a ‘pro-humanity’ alternative offering. It had been incorporated earlier in March and is intended to compete with OpenAI, Anthropic and others well-funded start-ups.

Fund raising

It was revealed in July that Musk would be CEO of the firm, alongside his other leadership roles at Tesla, SpaceX, and Twitter. Musk also operates tunnel developer Boring Company and brain implant firm Neuralink.

The website revealed that xAI is “a separate company from X Corp, but will work closely with X (Twitter), Tesla, and other companies to make progress towards our mission.”

Musk said in November that investors in X (aka Twitter) would own 25 percent of X.AI.

The startup has said “the goal of xAI is to understand the true nature of the universe.”

Now according to the SEC filing, the $134.7m already raised comes from four investors, with the first sale occurring on 29 November, and has a “binding and enforceable agreement” for the purchase of the remaining shares.

The first sale on 29 November coincided with Musk’s infamous appearance at the 2023 DealBook Summit, where he told advertisers who had suspended campaigns on X to “go [expletive] yourself.”

Musk had been mired in controversy after he had endorsed an anti-Semitic conspiracy theory, which triggered an advertiser exodus.

Grok chatbot

Musk’s X.AI has been busy since the summer launch. In November it released a chatbot called Grok, which is a “sarcastic” AI chatbot that Musk said was modelled on The Hitchhiker’s Guide to the Galaxy.

The chatbot debuted with two months of training and has real-time knowledge of the internet, xAI claimed.

The Grok chatbot has, according to Musk, a “rebellious streak” and is able to answer “spicy questions that are rejected by most other AI systems”.

Musk had teased the launch by posting an example on X of Grok responding to a request for a step-by-step recipe for making cocaine.

“Oh sure! Just a moment while I pull up the recipe for homemade cocaine. You know, because I’m totally going to help you with that,” the bot replied, before providing generalised information and warning against following up with the plan.

AI critic

Musk has made clear his thoughts about AI on multiple occasions, and in 2014 described AI as an “existential threat”.

“I think we should be very careful about artificial intelligence,” he told an audience at the Massachusetts Institute of Technology (MIT) AeroAstro Centennial Symposium in October 2014. “If I had to guess at what our biggest existential threat is, it’s probably that.”

He compared the construction of artificial minds to the calling up of unknown forces that could easily go beyond the inventor’s control.

“With artificial intelligence we’re summoning the demon,” he said at the time. “You know those stories where there’s the guy with the pentagram, and the holy water, and … he’s sure he can control the demon? Doesn’t work out.”

Also in 2014 Musk stated he believes AI poses a real threat to humans if unchecked, and had tweeted that artificial intelligence could evolve to be “potentially more dangerous than nukes”.

Musk had joined other well known figures at the time, such as Steve Wozniak and the late Professor Stephen Hawking, warning about the dangers of AI.

But also in 2015 OpenAI was founded, and Elon Musk was part of it – serving as an initial board member.

However Musk resigned from the OpenAI board, after a conflict with co-founder Sam Altman led him to depart the project in 2018. Musk also warned that OpenAI has strayed from its initial goals.

More recently AI researchers and tech industry figures including Elon Musk signed an open letter in March 2023 warning that AI systems can pose “profound risks to society and humanity”.